Council Members Approve $75 Million Head Tax, Reject Durkan's Plan

The long battle for an employee hours tax continues.

Seattle council members in the finance committee on Friday narrowly approved a $75 million head tax—but the council failed to find middle ground between those who supported the original proposal and those who wanted Mayor Jenny Durkan's smaller tax.

"The bill that passed out of committee hurts workers by stopping these good jobs, so I cannot support it," Durkan said in a statement following Friday's vote.

If the council can't find a supermajority consensus come Monday, supporters leave the bill vulnerable to a veto.

The legislation's sponsors Friday morning rushed for a compromise after Durkan on Thursday evening announced a proposal for a smaller head tax. Four council members supported Durkan's plan, but it ultimately died in committee when neither side was willing to compromise.

Durkan's proposal would have charged $250 per employee per year instead of the current legislation's $500. That would mean around $40 million a year in revenue, compared to the original $75 million a year.

Durkan's amendment also sunset the tax in five years with an option for renewal, putting at risk the "ongoing," reliable revenue council members had originally wanted to dedicate to affordable housing and homelessness. And finally, it put more of a focus on emergency services over building affordable housing, and included funding cleanup efforts to take garbage, waste, and needles off the streets.

For the council members who sponsored the original bill, those three changes were big concessions.

Herbold in committee said council members must do what they've committed to do—make a big dent in the city's investment toward housing and solving homelessness. Efforts like funding rapid rehousing options don't work, she said, criticizing the mayor's spending plan.

"This is a spigot issue. This is a supply issue. We have to address it," she said. "We have made massive new investments in rapid rehousing. ... They can't use (vouchers) because there is no housing."

As more Seattle residents grow frustrated, feeling like the city hasn't done enough to address homelessness and not seeing results, the city runs out of avenues for funding. Another option would be sales or property taxes, which disproportionately impacts low-income residents.

Ask for too little, and it's less likely the city could adequately address the problem, looking for more money again in the future.

The five council members who proposed a much larger tax had a tough decision to make: Either back down from the progressive revenue task force's recommended $75 million a year, and risk a veto from the mayor, or accept a compromise that will mean much less revenue than they wanted.

Instead, an amended bill on Friday morning proposed that the city still start with $75 million a year in revenue but reduce the tax to $27 million a year in revenue by 2024 ($180 per employee per year). It kept the tax intact with no sunset but removes the transition into a payroll tax.

Another amendment offered by Lisa Herbold proposed reducing the tax from 26 cents to 18 cents, or $500 to $350 per employee per year. That would have reduced the revenue to about $55 million a year.

Both compromises failed in a 5-4 vote, ironically tying Kshama Sawant—who wanted no concessions to the original plan—with the four opposing council members—who supported Durkan, and maybe didn't think the amendments went far enough. That leaves the bill exactly where it started, at $500 a head per year and $75 million a year in revenue, with just enough votes to pass.

Leading up to Monday, council sponsors of the bill will try to wrangle one more vote on their side to make it veto-proof. Opponents of the current head tax have the upper hand—knowing full well that the legislation that passed out of committee likely wouldn't pass Durkan's standards.

Durkan's late announcement on Thursday gave council members little time to figure out some wiggle room to her proposal, and provided few details as to where that money would go or how she would spend it. But Durkan, who's resented her "pro-business" label since her campaign, still feels immense political pressure to come out as neutral and put off tangible stands on a bill that the city had been anticipating for months.

The question then remains whether the four council members who supported Durkan—Sally Bagshaw, Bruce Harrell, Rob Johnson, and Debora Juarez—are amenable to any changes that would resemble middle ground between the amendments proposed today—one that reduced the tax to $350 per employee per year, not too far from Durkan's $250—and what the mayor wanted.

Updated 2pm after the council vote, and again at 2:45 following a statement from Durkan.